Scrapping employer fees would be a mistake

22 Jun 2018, 11:00

We revealed this week that the government is considering a U-turn on apprenticeship employer fees.

Since May last year, and for the first time in the history of apprenticeships, providers could only access government funding for small, non-levy paying firms after they received a 10-per-cent payment from the employer.

This employer charge is central to the apprenticeship reforms, forcing employers that do not pay the levy or had exhausted their levy credit to put their hands in their pocket and invest.

The Skills Minister, Anne Milton, rightly acknowledges the benefit of requiring employers to pay, saying “a contribution from somebody is important, because it requires their buy-in to what they’re getting into”.

Yet in my wide-ranging interview the minister also confirmed that a rethink on employer fees is in the mix.

Scrapping employer fees would be popular with many providers, particularly those working with SMEs, so it is no surprise that the AELP has been pushing for it for some time.

But a volte-face on employer fees, even a temporary one for a low level apprentices, would be a detrimental and unnecessary knee-jerk reaction to a temporary decline in starts.

Pitching “free” may well stimulate additional demand in the short term, but only from those employers unwilling buy a product with a 90-per-cent subsidy.

Are these freeloaders really going to invest in genuine job creation, mentoring and releasing employees for off-the-job training?

Such a move is also unnecessary, as other factors are more likely hampering employer demand and supply, including: willingness to release the employee for off-the-job training, limits on subcontracting, waiting for standards to become approved for delivery, and a botched attempt by the ESFA at limited non-levy allocations.

Free damages the value of the product, a product that providers should not be so quick to give away.

So the government should certainly fully fund 16- to 18-year-olds again, but for adults, especially those already in work, employers must have financial skin in the game.

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  1. I know this comment probably won’t be published, however, I find the comments around it ‘suiting providers so they can push free’ to be flippant and discourteous to the hard work we have to put in during difficult times.

    What you fail to address here is that the buying power is with employers. There’s absolutely no evidence to back up that the drop in starts is temporary at all. I can assure you, as someone who is on the ground, that employers are turned off by contributions – particularly when recruiting young people.

    Employing a 16-18 year old is a cost, one which exceeds a reduced NMW. I have employers who I’ve worked with for in excess of 5 years, recruiting one or two a year, all of whom are still employed and are now in higher level positions – who no longer see the value now that they have to pay. It’s a kick in the teeth to small businesses, who are systematically under pressure from Government and challenging economic times.

    Your comments are anti-provider and frankly plucked out of thin air.

    • Christine

      Totally agree we cannot all be wrong and AnneMilton right
      I hope you are going to the debate on Monday regarding apprenticeship reforms
      Reduced funding for frameworks is also causing problems for providers to continue to deliver apprenticeships during the interim period of no available standards
      We cannot deliver at a loss

  2. Liam Ryan

    Dealing with small and microbusinesses in the Early Years Childcare Sector I find that the 10% charge does have an impact on the numbers of starts but it’s third in line behind the impact of 20% OTJ and the massive cut we had in funding rates for our Framework .
    I understand the drivers behind the 20% OTJ but where staff ratios are a statutory requirement, not allowing it to take place outside of normal working hours is a non-starter.
    Also, our first priority is survival so if it’s a choice between recruiting loss making level 2 apprentices, break even level 3 apprentices or loan funded learners where we can actually make a living, our focus will remain on the latter.

  3. Victoria

    Completely disagree with you Nick, the 10% employer contribution is a massive barrier for employers who simply can’t afford it.

    In health & social care employers are being squeezed and is already near breaking point with a whole set of sector challenges. And although 10% of £3k banding may not seem a lot, it is when you need to have 20-30 apprentices coming through your organisation.

    Its disheartening that the quality of skills, knowledge and behaviours needed in this sector is so devalued, these apprentices are critical to the future of the sector and now with new degree apprentices, have some real strong career pathways. They are low paid workers, but not low skilled!

    Putting these learners who NEED an apprenticeship through AEB won’t help either – might as well call that Train to Gain, which was proven to have little ROI and value for employers.

    Lack of learners on apprenticeships in this sector means lack of skills and knowledge which is needed – and the impact? The most vulnerable people in our communities receiving care from poorly or untrained staff as well as less potential workers engaging with the sector because of lack of opportunities.